Auditors’ Responses to Workload Imbalance and the Impact on Audit Quality

66 Pages Posted: 1 Apr 2020 Last revised: 7 Apr 2021

See all articles by Jin Suk Heo

Jin Suk Heo

Hongik university

Soo Young Kwon

Korea University

Hun-Tong Tan

Nanyang Business School, Nanyang Technological University

Multiple version iconThere are 2 versions of this paper

Date Written: March 7, 2020

Abstract

Using detailed data for fieldwork hours and audit hours by rank from audit engagements in Korea, we examine whether audits conducted under workload imbalance, proxied by busy-season audits, impair audit quality, and how auditors adjust staff assignments for busy-season audits. We generally find that busy-season audits are associated with lower audit quality, and that audit firms reduce the involvement of senior auditors during busy-season audits. In addition, the greater the involvement of senior auditors and junior auditors, the lesser the deterioration in audit quality. Finally, although there is no increase in interim audits in response to workload imbalance during busy seasons, increasing interim audits can mitigate the negative impact of busy-season audits on audit quality. Our results are relevant to auditors and regulators, who have expressed concerns about the adverse effects of workload imbalance on audit quality.

Keywords: workload imbalance, busy-season audits, audit quality, labor mix, end-of-year auditor hours by rank, interim audits

JEL Classification: M40, M41, M42, M48

Suggested Citation

Heo, Jin Suk and Kwon, Soo Young and Tan, Hun-Tong, Auditors’ Responses to Workload Imbalance and the Impact on Audit Quality (March 7, 2020). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3550392

Jin Suk Heo

Hongik university ( email )

2639 Sejong-ro Jochiwon-eup
Sejong-si, 30016
Korea, Republic of (South Korea)
+82-044-860-2055 (Phone)

Soo Young Kwon (Contact Author)

Korea University ( email )

#601 LG-POSCO Hall KUBS
145 Anamro, Seongbuk-Gu
Seoul, 02841
Korea, Republic of (South Korea)
+82-2-3290-1937 (Phone)

Hun-Tong Tan

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
+65 6790 4819 (Phone)
+65 6793 7956 (Fax)

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